According to Harwood, the interested parties will need to move fast to pre-qualify by the initial deadline of May 28, but qualifying bidders will then have until September 25 to submit their bid. Successful parties are scheduled to be announced in the first quarter of 2019.

The two blocks are being offered under a PSC regime. This is the first time Thailand offered this type of contract.

Harwood said that key biddable elements of the auction round were gas production, gas price, and production share attributable to the government. Bidders must commit to a minimum production of 800 mmcfd for G1/61 (Erawan) and 700 mmcfd for G2/62 (Bongkot) for a period of ten years from the PSC start date.

“We estimate the maximum gas price available, derived from the government’s formula and indexed to Dubai crude, will be set at US$7.5/mcf in 2022, assuming a Dubai crude price of US$68/bbl in 2022. The minimum government production share is set at 50%. Signature and production bonuses will also be biddable.

“In order to achieve the ambitious production targets, we estimate the successful bidders will need to spend US$11 billion and US$6.4 billion for G1/61 and G2/61 respectively from 2020, excluding decommissioning costs. This would involve the development of over six tcf of gas resources,” the research director said.

Also, when developing bid strategies, interested parties need to consider decommissioning, resource risk, and Thailand’s political environment – all uncertainties that could impact the value of the projects.

The existing participants – Chevron, PTTEP, MOECO, and Total – were, Harwood said, well placed to bid, given their existing experience of the projects, but there is likely to be interest from other players in Thailand such as Mubadala, CNOOC, or Petronas.